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Subject: Re: FAQ Date: 8/5/2013 10:14 AM
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"Real Estate Inv. Trusts: REITs" FAQ - Updated 5 August 2013

Important note: Many of the answers below are brief generalizations, and do not necessarily reflect a complete, detailed discussion that many of the topics require. Most answers here are meant to be starting points to help you, not the final answers to your questions. Many of the best discussions on this board occur when a frequently asked question is re-asked, so please do not be afraid to do so. (It might be a good idea, though, to mention that you've already read the FAQ, and would like further discussion.)


How to best use this FAQ
If you are new to REITs and/or this board, the best approach is probably to quickly read the entire FAQ, to familiarize yourself with its contents. Avoid clicking on many links, however, as reading all of those can stretch the reading time from minutes to days or weeks. Use this FAQ as a reference that you can return to as needed.

When you return to this FAQ to look for a specific answer or message, it is best to use your browser's search capability to search for the desired text. For example, if you're looking for the "Bluest of the Blue" list, search for "Bluest", and you'll be positioned to the correct FAQ in a couple of hits.


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Table of Contents
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FAQ X: How to post to this board -- disagreeing, but with civility.
1. I'm new to REITs. Where should I begin?
2. How do I research REITs? (Links to sites, publications, books)
3. Should I buy individual REITs or REIT mutual funds?
4. Do I use EPS to value REITs? FFO? AFFO? NAV? (And what are these?!)
5. I can't find NAVs; can I use book values?
6. How do many REITs pay dividends > EPS? And how can REITs grow?
7. How are REIT dividends tax-advantaged?
8. So should REITs only be bought in taxable accounts?
9. Can I expect to get 15% annually in REITs?
10. What are the different REIT sectors?
11. What sectors should I invest in, and should I try to "market weight" my
holdings by sectors?
12. How many REITs should I own?
13. What's THIS mean? (Glossary of other terms)
14. Are REITs "bond surrogates"?
15. Where can I find more information on REIT preferred stocks and convertibles?
16. Are there REIT ETFs or CEFs?
17. What REITs does the board recommend? (Bluest of the Blue, Dividend Achievers)
18. What REIT funds does the board recommend?
19. How much should I allocate to REITs?
20. What about mortgage REITs (aka MREITs)?
21. Private REITs (e.g., Wells REIT) – any opinions?
22. Where can I get general "Real Estate" questions answered?
23. What REITs are in the S&P?
24. What are some of the best past messages?



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FAQ X: How to post to this board --disagreeing, but with civility.
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If you are new to this board, welcome! We strive to achieve a friendly, helpful environment, and we strongly encourage you to post questions, thoughts, and responses without hesitation. (However, before starting a new thread, please take the time to first look at recent threads for similar topics.)

The board has adopted a policy to encourage and help enforce polite discourse. We learn best when opposing points of view are presented. But it is imperative that differing viewpoints be discussed in a calm, reasoned, respectful manner. To that end:

All posts that relate to other posts should speak only to the topic. Refrain from commenting on another poster's intelligence, expertise, or tone, except to be complimentary. Do not post to the board personal attacks, defenses against same, retaliation for same, or complaints about same. If you see anyone violating any part of this policy, it is a good idea to send him or her a PRIVATE EMAIL saying 'In my opinion you are violating FAQ X. Please stop.' Posting that someone else is violating FAQ X, is itself a violation of FAQ X. In short: (a) Take it outside, or (b) let it drop.

Some examples of what not to post:
You remind me of Hitler.
Your post was condescending, and I did not appreciate it.
I believe your post was a violation of FAQ X.
I'm going to put you on ignore if you continue responding in that manner.
I just got an email saying my post is a violation of FAQ X, but I feel it wasn't.
Respectfully, I believe you should find another board to post on.


Please remember: Challenge the thought, not the thinker.


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1. I'm new to REITs. Where should I begin?
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Trying to read this FAQ, or the REIT board, may seem a bit overwhelming at times if you're a complete REIT novice. People toss out ticker symbols and REIT-specific terms with no explanations at all. It will take a little time & effort to "get up to speed", but you can easily do so. Here are some specific suggestions to help get you started. Also, be sure to read the "How do I research REITs" FAQ directly below, in which these and other references are listed (with brief descriptions).

1. Read every message you can, even if you don't understand most of them. Eventually, they will all begin to make sense.

2. One of the best ways to learn is by reading a book. The book recommended here is Investing in REITs: 4th Edition, by Ralph Block (who posts here often as "Reitnut"):
http://tinyurl.com/lfhwvd7 (Amazon.com link)

3. The following website is a good place to start your REIT education:
http://www.reit.com/REIT101/WhatisaREIT.aspx

4. Subscribe to publications. Some electronic versions are free, such as the following:
REIT Real Estate Investment Today Go to http://www.realestateinvestmenttoday.com/ and look for the link to the current issue of the magazine, as well as an archive of years of back issues.

6. Write some posts. After doing some reading, if there's something you don't understand, ask. There may be dozens of other "lurkers" who also don't understand it, and would like to ask, but don't. Help them, and help yourself.


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2. How do I research REITs? (Links to sites, publications, books)
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Site links: (listed in approximate order of usefulness)
www.reitcafe.com - A free site that contains a huge amount of information helpful to the individual investor, including content exclusive to REITcafe. You’ll find podcasts of interviews with company executives and other industry leaders, REIT conference calls, news, and much more. Highly recommended.

www.reit.com – NAREIT’s website (National Association of REITs). In-depth site with lots of data and publications. Check out the entire site, as it's very large, with a LOT of useful information in many different places (including an archive of year-end tax reporting data). Be sure to read their FAQ also: http://www.reit.com/REIT101/REITFAQs.aspx

seekingalpha.com - Provides transcripts of REIT conference calls. (Be sure to click on "Single Page View" to see the entire transcript on one page.)

www.moodys.com - Rates credit of many larger REITs; free registration required. See http://boards.fool.com/Message.asp?mid=18570933&sort=who... for past default rates. See the "Best past messages" FAQ for more on "Credit Ratings".

www.fitchratings.com - Another credit rating company. They publish REIT research reports (requires free account).

www.globest.com - Globe St.com is a general, commercial Real Estate site. But it does contain some recent REIT-related data, though it may take some digging to find them. Very active and up-to-date news articles.

www.nreionline.com - NREI (National Real Estate Investor). Has real estate- and REIT-related news.


REIT book:
Investing in REITs: 4th Edition by Ralph L. Block (2011). Ralph Block posts here as "Reitnut". This book is the book most often recommended on this board.


Publications: (listed alphabetically)
www.irei.com - Institutional Real Estate, Inc publishes several periodicals, some of which have back issues available for reading.

http://www.reit.com/DataAndResearch/Statistical-Publications... - NAREIT's REITWatch, an electronic monthly publication containing statistical data on the REIT industry, broken down by sector and individual REIT. One of the more useful free publications available. Back issues are available all the way back to 1999.

http://www.reit.com/News/REITMagazine/BackIssues.aspx - NAREIT's REIT: Real Estate Investment Today magazine. The current issue is at: http://www.realestateinvestmenttoday.com/. Back issues currently go all the way back to 2009.

www.treppreitcafe.com/reitcommentary.aspx – REIT commentaries by Susan Persin.

http://www.snl.com/Sectors/RealEstate/Newsletters.aspx - Daily and weekly publications on all publicly traded REITs & REOCs. Sample issues are available for downloading, as well as an extensive story archive from the Weekly publication. You can sign up for a two-week free trial to their weekly publication. They also have a quarterly publication available that contains a large amount of data for most every REIT.


Analyst research:
Most brokerage firms (including some discount brokerages) offer free research for customers. This research often includes some REIT-specific reports. Check your brokerage account, and see what it has to offer (and if you find something useful, please post the information to the board, so that it can be added to this FAQ).

If you search google with the following phrase: site:morganstanley.com Weekly REIT Insights you may find links to current REIT research from Morgan Stanley. Their Weekly REIT Insights contains a lot of useful data, though it is not as readily available as it used to be when it was from Smith Barney / Citigroup.

www.greenStreetAdvisors.com - Well-respected buy-side analyst shop. Research reports are generally considered too expensive for most individual investors, but occasionally the site contains sample reports that can be very educational.


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3. Should I buy individual REITs or REIT mutual funds?
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This greatly depends on your own goals and desires. The last time the board was polled, 75% of the respondents had most or all of their REIT assets in individual securities. But that doesn't make it right for you, necessarily. Just as with other stocks, there are pros and cons with investing in REITs versus REIT funds. Here's a post that lists some of the reasons why one might prefer individual REITs: http://boards.fool.com/Message.asp?mid=14174328 Fund investing, OTOH, is much simpler and easier, and can provide you with instant diversification and experienced management.


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4. Do I use EPS to value REITs? FFO? AFFO? NAV? (And what are these?!)
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REITs have several performance metrics: GAAP EPS (just like Ford and Coke); FFO (Funds From Operations, the REIT version of operating cash flow); AFFO (Adjusted Funds From Operations, FFO adjusted for ongoing capital expenses); and more recently, a controversial performance measure, Operating EPS, which is FFO with depreciation subtracted back out. While Operating EPS seems to be dead-on-arrival, FFO and (especially) AFFO are the most popular ways of looking at operation performance. Unfortunately, AFFO is not reported by most REITs, and so different analysts use different methods to arrive at AFFO. See:
http://boards.fool.com/Message.asp?mid=18919615 and
http://boards.fool.com/Message.asp?mid=24192832 (Understanding FFO)

As a valuation metric, Net Asset Value (NAV), is the most common. However, NAV is an estimated value, and frequently varies quite a bit for an individual REIT, depending on the analyst creating the estimate (not unlike estimates of future EPS for non-REITs, in that respect). NAV is meant to estimate the current liquidation value of the underlying real estate properties within a REIT. See http://boards.fool.com/Message.asp?mid=17095034 for an excellent discussion on the usefulness of NAVs.

Valuing a REIT is not simply a matter of looking up the NAV and deciding the current REIT price is "cheap". Depending on your goals (aggressive vs. conservative, income vs. growth, etc.), you may want to consider numerous variables, including sector, geographic diversification, property class, dividend payout ratio, management, FFO growth, debt rating, etc. Some of these are qualitative measurements that are not easy to obtain.

Here is a great discussion on exactly why PE is irrelevant with REITs:
http://boards.fool.com/Message.asp?mid=19942497&sort=who...


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5. I can't find NAVs; can I use book values?
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Using book value to compare REITs is fairly useless. REIT assets in book value are their cost basis less depreciation. A REIT with older assets may have significantly or even completely depreciated some assets, whereas those assets are almost certainly worth considerably more than their depreciated amount.

But NAV estimates are not easy to obtain, and can vary widely depending on the assumptions made in the calculations. A large sampling of many estimates for a specific REIT is helpful in achieving a more accurate figure, but these are generally difficult to find. Some buy-side & sell-side analysts occasionally publish NAV estimates. See "How do I research REITs?" above for links to a few of these resources. Another possible source is from firms such as SNL Research. They will email you an Excel spreadsheet each month containing updated consensus NAV estimates for all equity REITs. The cost is high for an individual investor, but is currently the least expensive source available for such data.


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6. How do many REITs pay dividends > EPS? And how can REITs grow?
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EPS is usually not a good measure to use in evaluating REITs, since GAAP EPS deducts depreciation. Dividend payouts are usually compared to FFO or AFFO, to determine the ratio of dividends to free cash flow, as opposed to comparing against "earnings". (See the following question/answer below as well.)

REITs can grow even though they are paying out more than taxable earnings, since most of them pay out far less than cash flow. They can also raise cash by selling more equity, of course. Additionally, they may sell properties to raise cash, and re-invest the money in new construction or acquisitions (presumably at higher rates of return than the disposed properties). They may also grow income by rent increases, of course.

Here are 2 posts that do a very good job of illustrating the differences between GAAP net income and taxable income:
http://boards.fool.com/Message.asp?mid=18389518
http://boards.fool.com/Message.asp?mid=17823337

And, the definitive post on the issue (read it!):
http://boards.fool.com/Message.asp?mid=20789178

and one that illustrates net income vs. net cash flow:
http://boards.fool.com/Message.asp?mid=17826810


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7. How are REIT dividends tax-advantaged?
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Depends on what you mean. First of all, unlike non-REITs, dividends paid out by REITs are not taxable to the REIT itself (that is, they are subtracted from taxable income). REITs must pay out at least 90% of taxable income. That's the lower limit; REITs may (& usually do) pay out more than that, including more than the total taxable income. When that happens, part of the dividend is considered "return of capital" (ROC), which is not taxable income to the recipient (you). Instead, it lowers your basis in the REIT. Thus, the ROC portion of a dividend (if any) is tax-deferred until you sell the REIT, and will then be taxed at the capital gains rate (short or long, depending on how long you held the REIT). (If your basis in a REIT is lowered to zero, further ROC dividends are taxable in the year received, at the rate applicable to a sale of that REIT.) For a more detailed discussion of ROC, see:
http://boards.fool.com/Message.asp?mid=18982084 and
http://boards.fool.com/Message.asp?mid=20696070&sort=who...

Besides ROC, a portion of REIT dividends sometimes is eligible for long-term (LT) and super-long-term (5-yr) capital gains (CG) treatment. Also, some REITs may have a portion of their dividends assigned to "unrecaptured section 1250 gains", which are taxed at a maximum rate of 25%.

Most REIT ordinary dividends are not "qualified" dividends, so the low "qualified" dividend tax rate for individuals does not apply. (A few REITs do pay a non-trivial portion of their dividends as "qualified" dividends, but most do not.)

The NAREIT web site (www.reit.com) contains tax data going back several years that can be used to see how much a particular REIT's dividend has been tax-advantaged. This amount can vary greatly from year-to-year, depending on the REIT, but patterns can often be seen. As a very rough example, for the 3 years 1999-2001, the arithmetic unweighted average of all REIT dividends was approximately 3/4 ordinary dividends, 1/4 ROC and LT CG.

Also available on the NAREIT site is a document showing the distribution of REIT dividend taxation over the last 17 years: http://returns.reit.com/1099/HistoricalDividendAllocationSum...


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8. So should REITs be bought only in taxable accounts?
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REITs can be appropriate in taxable or tax-deferred accounts, depending on the REIT and your goals. See http://boards.fool.com/Message.asp?mid=17087371 for a brief discussion. For a longer discussion, see:
http://boards.fool.com/Message.asp?mid=18987535&sort=who...


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9. Can I expect to get 15% annually in REITs?
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If you do have such expectations, you'll likely be very disappointed. Over the long-term (10 years or more), many analysts believe REITs should provide a total return of around 10%, give or take a percent or two. This is fairly similar to the expected long term return on non-REIT equities, as well. The difference with REITs being, of course, that much of that return is actually returned to you, in the form of dividends, and is therefore considered more desirable for some situations (e.g., current income). (Update: The long-term outlook at the time of this update [2005; affirmed in 2010 and 2013] is more likely to be in the 7% range, plus or minus a percent or two.)


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10. What are the different REIT sectors?
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Equity REITs can be classified according to the property type(s) that they own. (There are also mortgage REITs, which generally do not own properties, but instead have mortgage loans that are secured by real property.) There is no single, unique list of sectors, but most lists generally contain names such as the following:

o Apartments (aka "Multi-family")
o Manufactured Homes
o Retail: Factory Outlet Centers
o Retail: Malls
o Retail: Shopping Centers
o Healthcare
o Net Lease
o Lodging (aka "Hotels")
o Office
o Industrial
o Office + Industrial (aka "Mixed")
o Self-Storage
o Diversified
o Other (catch all)
"Diversified" indicates REITs that own properties in numerous sectors (such as Apartments, Office, Industrial, and Retail).

Some older discussions on REIT sectors include:
Sector comparison - http://boards.fool.com/Message.asp?mid=15557389
Defensive REITs - http://boards.fool.com/Message.asp?mid=14763049
Offensive REITs - http://boards.fool.com/Message.asp?mid=14772347
Sector Weightings - http://boards.fool.com/Message.asp?mid=17079829
Recovery Type vs. Sector - http://boards.fool.com/Message.asp?mid=16132422

Also, see the next question:


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11. What sectors should I invest in, and should I try to "market weight" my holdings by sectors?
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An answer to this question begins in the 3rd paragraph of this message: http://boards.fool.com/Message.asp?mid=17098728

Another good thread on REIT sector investing is:
http://boards.fool.com/Message.asp?mid=18050838&sort=who...


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12. How many REITs should I own?
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Similar questions are "How many REITs are too many?" and "What's the minimum # of REITs I can own and still have adequate diversification?".

These are highly subjective questions, and there are no "right" answers for everyone. However, as a general rule, you may own too many REITs if you have more REITs than you have time available to follow them. As for the minimum number to own, it's often said that owning at least one in each of the major sectors is the absolute minimum needed for diversification (retail, multi-family housing, office, industrial). However, if your portfolio is large enough, 10 is sometimes recommended as the minimum number of REITs needed for diversification.

One other consideration is whether owning a large number of REITs stocks is any different from owning a REIT index fund:
http://boards.fool.com/Message.asp?mid=20092644


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13. What's THIS mean? (Glossary of other terms)
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This section contains brief definitions of some common REIT-related terms that are not defined elsewhere in this document. If you are unable to find what you're looking for, try here: http://www.reit.com/REIT101/GlossaryofREITTerms.aspx

Cap Rate (short for Capitalization Rate) is best explained here:
http://boards.fool.com/Message.asp?mid=18435237 and here:
http://boards.fool.com/Message.asp?mid=21200177

Payout Ratio is the ratio between cash flow and the distribution, as described here:
http://boards.fool.com/Message.asp?mid=18227567

REIT is an acronym for Real Estate Investment Trust. And what is that? NAREIT's investor site gives a good definition: http://www.reit.com/REIT101/WhatisaREIT.aspx

REOC is an acronym for Real Estate Operating Company. REOCs are C-corps, not organized as REITs, so they pay corporate income tax on any dividends paid, and are not required to pay out at least 90% of their taxable earnings as dividends (as REITs are).

RMS & RMZ are the tickers for the most-followed REIT indexes - the MSCI US REIT Index. (The RMS is updated daily and includes dividends; the RMZ is updated constantly and is price-only.) There are numerous other REIT Indices, including S&P REIT, NAREIT Equity, and Wilshire REIT Index. The RMS is a total return index (i.e., dividends are added into the index's value). As of 2010, it included about 2/3 of all equity REITs. Healthcare REITs were originally excluded from the RMS, but were added in 2002.

UPREIT is an acronym for Umbrella Partnership REIT, referring to a REIT structure created for tax advantage purposes. This thread has several in-depth posts discussing UPREITs:
http://boards.fool.com/Message.asp?mid=18974190&sort=who...


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14. Are REITs "bond surrogates"?
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No. REITs do provide substantial dividend yields (often near that of investment-rated corporate bonds). However, REIT prices are subject to many different factors besides interest rates, and may move counter to bond prices at any particular time. A couple of good posts on the topic are:
http://boards.fool.com/Message.asp?mid=18600136
http://boards.fool.com/Message.asp?mid=19510421&sort=who...

Also, consider that REITs are stocks, and should be treated as such in an asset allocation plan. For example, during those rare but extreme market shocks, REITs are far more likely to head down with other stocks, while bonds (especially government bonds) are more likely to go up (in the ensuing "flight-to-quality").


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15. Where can I find more information on REIT preferred stocks and convertibles?
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Right here, for one. Preferreds are discussed quite often. Look for recent threads, you’ll probably find many.

A "REIT Preferred Starter Portfolio" collaboration between REITnut and Yodaorange:
http://boards.fool.com/reit-preferred-starter-portfolio-3077...

A REIT preferred primer by yodaorange is here:
http://boards.fool.com/read-this-before-buying-reit-preferre...

LordXot maintains a Google spreadsheet with all REIT preferreds listed, as well as others:
http://spreadsheets.google.com/ccc?key=pxwo3a8qIjsELGWcpY1E9...

An older, but comprehensive listing of preferreds was this gem by Yoda & Ralph:
http://boards.fool.com/reit-preferreds-searching-for-value-a...

There's no site that we know of that is REIT-specific, but try these sites that include REIT preferreds & converts:
For preferreds: http://www.Quantumonline.com (requires free registration)

yodaorange posted a series of informative posts on "correct" pricing of REIT preferreds:
http://boards.fool.com/reit-preferred-prices-chapter-1-28359...
http://boards.fool.com/reit-preferred-prices-chapter-2-28375...
http://boards.fool.com/reit-preferred-prices-chapter-3-28394...
http://boards.fool.com/reit-preferred-prices-chapter-4-28416...
http://boards.fool.com/reit-preferred-prices-chapter-5-28447...
http://boards.fool.com/reit-preferred-prices-chapter-6-28657...
http://boards.fool.com/reit-preferred-prices-chapter-7-28918...
http://boards.fool.com/reit-preferred-prices-chapter-8-29045...

Here are some past messages addressing some issues regarding preferreds (what to look for and look out for, variations on tickers, etc.):
http://boards.fool.com/Message.asp?mid=24122627&sort=who... (Details on cumulatives)
http://boards.fool.com/Message.asp?mid=23941890&sort=who...
http://boards.fool.com/Message.asp?mid=21176139 (an excellent general summary of preferreds)
http://boards.fool.com/Message.asp?mid=21176986 (consider reading this entire thread)
http://boards.fool.com/Message.asp?mid=17300139
http://boards.fool.com/Message.asp?mid=17801295 (& next message)
http://boards.fool.com/Message.asp?mid=18275252
http://boards.fool.com/Message.asp?mid=19367289&sort=who...
http://boards.fool.com/Message.asp?mid=19645726&sort=who... (includes a link to a quasi YTFC calculator)


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16. Are there REIT ETFs or CEFs?
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ETFs (Exchange Traded Funds) & CEFs (Closed End Funds) are fairly similar; in fact, some definitions provide that CEFs are a subset of ETFs (since CEFs literally are exchanged-traded funds). The more generally accepted definition, however, is that ETFs differ from CEFs in two significant ways:

1. ETFs generally represent unmanaged index funds, whereas CEFs are generally managed funds, so ETF expense ratios are generally lower. However, there's no reason why managed ETFs can't exist.

2. More importantly, ETFs are open-ended, meaning that the portfolio can increase (or decrease) in size, based on demand. CEFs have a fixed portfolio size, and often trade at discounts or premiums to the underlying value of the portfolio, based on demand.

3. Almost all REIT CEFs are at least moderately leveraged.

Some of the real estate & REIT-related ETFs are:
ICF - iShares Cohen & Steers Realty Majors Index Fund: Tracks the C&S Realty Majors Index, made up of 30 of the largest REITs. See http://www.cohenandsteers.com/ for more information on ICF and all their REIT ETFs.
IYR - iShares Dow Jones U.S. Real Estate Index Fund: Tracks the Dow Jones U.S. Real Estate index, which is almost, but not quite, all REITs. You can see the most recent portfolio at the iShares website: http://us.ishares.com/product_info/fund/overview/IYR.htm?fun...
RWR - streetTRACKS Wilshire REIT: 98 REITs, tracks the Wilshire REIT Index..
VNQ - Vanguard REIT Index VIPERs: An ETF form of Vanguard’s open-end mutual fund that tracks the RMS (the Morgan Stanley REIT Index).

See this link on NAREIT’s website for a more complete list of REIT ETFs:
http://www.reit.com/Investing/ListofREITFunds/Exchange-Trade...

Some of the real estate & REIT-related CEFs are:
JRS - Nuveen Real Estate Inc Fund. At least 80% invested in REITs, at least 90% in real estate related companies. Objective is high current income and capital appreciation.
RFI - Cohen & Steers Total Return Realty Fund. Objective is maximum total return through both current income & capital appreciation. Invests primarily in REITs. At of 2010, RFI is the only REIT CEF that does not use leverage to boost returns (and risk).
RLF - Cohen & Steers Advantage Income Realty Fund. At least 90% in real estate related companies, primarily REITs. Objective is high current income.
RQI - Cohen & Steers Quality Income Realty Fund. Objective is high current income; secondarily capital appreciation. Investing parameters similar to JRS (though there's no fixed minimum REIT investment required).
RRE - AIM Select Real Estate Income Fund. Very similar objective & investing parameters as JRS.

Here’s a post that enumerates some things to look at when considering a CEF:
http://boards.fool.com/Message.asp?mid=20657664

A post describing how to determine the real time premium or discount of a CEF’s NAV to its market price:
http://boards.fool.com/Message.asp?mid=27993316

Cohen & Steers has more CEFs than those listed above; visit their website for more choices & information: http://www.cohenandsteers.com

See this link on NAREIT’s website for a more complete list of CEFs:
http://www.reit.com/Investing/ListofREITFunds/Closed-EndFund...

Some links to general ETF & CEF information:
http://www.indexfunds.com/ETFzone.php
http://www.morningstar.com/Cover/ETFs.aspx
http://www.nasdaq.com/investing/etfs/
www.cefa.com/
http://www.cefconnect.com/


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17. What REITs does the board recommend? (Bluest of the Blue, Dividend Achievers)
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Bluest of the Blue
In the past, the board discussed and voted on a list of REITs it called "The Bluest of the Blue" (aka "BofB", "B of B", or BoB). It was comprised of the REITs (up to 20) that the board felt were the best of the "Blue Chip" REITs. The board considered a "Blue Chip" REIT (originally defined in Ralph Block's book) as having the following characteristics:
1. Outstanding proven management.
2. Shareholder friendly use of capital.
3. Balance sheet strength.
4. Adheres to an appropriate geographic strategy.
5. Good corporate governance.
6. Policy of dividend sustainability.

Here's a post containing a brief summary of each criterion:
http://boards.fool.com/Message.asp?mid=27401784

An excellent discussion of these attributes can be read at:
http://boards.fool.com/Message.asp?mid=20174737&sort=who...

Here's the last "Blue List" (from March 2010), including the 12 "Bluest of the Blue" REITs:
http://boards.fool.com/Message.asp?mid=28356892

At least as important are the discussions that led to creating the list each year. Here are links to some BofB discussion threads (warning: some are quite long):

2010 Blue List thread: http://boards.fool.com/Message.asp?mid=28235777&sort=who...
2009 Blue List thread: http://boards.fool.com/Message.asp?mid=27354731&sort=who...
2008 Blue List thread: http://boards.fool.com/Message.asp?mid=26337768&sort=who...
2007 (Blue List rules, 2006 Blue List, plus 12 threads): http://boards.fool.com/Message.asp?mid=25079934
2006 (Blue List rules, plus next 13 threads): http://boards.fool.com/Message.asp?mid=23588074
2005 (Blue List rules, plus next 13 threads): http://boards.fool.com/Message.asp?mid=21950711
2004 (Blue List rules, plus next 12 threads): http://boards.fool.com/Message.asp?mid=20369204
2004 (B of B only): http://boards.fool.com/Message.asp?mid=20234912&sort=who...
2003: http://boards.fool.com/Message.asp?mid=18348436&sort=who...
2002: http://boards.fool.com/Message.asp?mid=16501994&sort=who... and http://boards.fool.com/Message.asp?mid=16530176&sort=who...
2001: [none]
2000: http://boards.fool.com/Message.asp?mid=12360324&sort=who... and http://boards.fool.com/Message.asp?mid=12380511&sort=who...

Here are the previous BofB lists:
2009: http://boards.fool.com/Message.asp?mid=27508597
2008: http://boards.fool.com/Message.asp?mid=26457518
2007: http://boards.fool.com/Message.asp?mid=25295035
2006:http://boards.fool.com/Message.asp?mid=23793632
2005: http://boards.fool.com/Message.asp?mid=22166742
2004: http://boards.fool.com/Message.asp?mid=20469052
2003: http://boards.fool.com/Message.asp?mid=18601186
2002: http://boards.fool.com/Message.asp?mid=16676705
2001: http://boards.fool.com/Message.asp?mid=14310199
2000: http://boards.fool.com/Message.asp?mid=12380511


Dividend Achievers (aka The Gold List)
In Fall 2005, the board (led by factoids) discussed and created a list of REITs based on their exemplary history of dividend growth. The original discussion thread is here:
http://boards.fool.com/Message.asp?mid=23018754&sort=who...

There were numerous other threads (too many to list here) in the following few weeks discussing the concept, and specific sectors & REITs. The final “Gold List” appears here:
http://boards.fool.com/Message.asp?mid=23126561

REITs to Avoid
At the time of this update, there is no “official” list of REITs to avoid, however here is an older thread with some suggestions:
http://boards.fool.com/Message.asp?mid=21139944&sort=who...


################################################################################
18. What REIT funds does the board recommend?
################################################################################
The board doesn't have an official pick for REIT funds. The Vanguard REIT Index Fund (ticker VGSIX, or ETF ticker VNQ) tracks the RMS index (the MSCI US REIT Index), and is mentioned frequently as a fund of choice for many posters.


################################################################################
19. How much should I allocate to REITs?
################################################################################
There is no "one size fits all" answer, but here are some excellent discussions on the topic:

http://boards.fool.com/Message.asp?mid=18957736&sort=who...
http://boards.fool.com/Message.asp?mid=20609252&sort=who...
http://boards.fool.com/Message.asp?mid=21049056&sort=who...


################################################################################
20. What about mortgage REITs (aka MREITs)?
################################################################################
Mortgage REITs aren't discussed as frequently as equity REITs on this board, but they certainly do come up from time to time. As their name implies, mortgage REITs don't own properties, but rather they own loans on properties. Here's a brief primer on the sector:
online.wsj.com/article/SB10001424127887324539404578342531231...

Here are a couple of relevant threads:
http://boards.fool.com/Message.asp?mid=19908574&sort=who...
http://boards.fool.com/Message.asp?mid=20330663&sort=who...


################################################################################
21. Private REITs (e.g., Wells REIT)– any opinions?
################################################################################
The board has had numerous discussions concerning private REITs, and why they should be avoided at all costs. Here are a few relevant posts:
http://boards.fool.com/Message.asp?mid=23879788
http://boards.fool.com/Message.asp?mid=20794913
http://boards.fool.com/Message.asp?mid=19703924&sort=who...
http://boards.fool.com/Message.asp?mid=19460400
http://boards.fool.com/Message.asp?mid=19896181
http://boards.fool.com/Message.asp?mid=19896748
http://boards.fool.com/Message.asp?mid=20149029


################################################################################
22. Where can I get general "Real Estate" questions answered?
################################################################################
When this board was created, it was initially named "Real Estate". However, from the very 1st (non-TMF) message, the discussion has been almost exclusively "all things REITs": REITs, REIT preferreds, REIT convertibles, REIT mutual funds, REIT ETFs, etc. Five years later, the board's name was changed to "Real Estate & REITs" (the board preferred a different name, but TMF felt it was better not to venture too far from its original, well-known name). Two years later, in mid 2004, the board again changed its name, removing “Real Estate” from the name’s meaning.

Real estate questions not related to REITs (e.g., non-commercial rental real estate, your personal home, loan refinancing), may or may not be answered here. They won't be rudely answered, but they may be ignored. These boards may provide a better place for non-REIT questions:

Real Estate Investing -- Real Estate other than REITs:
http://boards.fool.com/Messages.asp?bid=113590

Buying & Selling a Home -- Personal advice about mortgages, agents, etc:
http://boards.fool.com/Messages.asp?bid=100144


################################################################################
23. What REITs are in the S&P?
################################################################################
NAREIT updates their list of REITs in the S&P frequently (usually within a day or two of a REIT being added or removed):
http://www.reit.com/REIT101/REITDirectory/REITsinSPIndexes.a...


################################################################################
24. What are some of the best past messages?
################################################################################
The following lists a few of the most content-rich posts and/or message threads on this board. To get the most out of the threads, press the message's "Whole Thread" link, and read (or at least scan) the entire thread. Note that there are MANY more valuable past messages/threads on this board than the few specified below.

#75004 Jul 13: Tax Question
http://boards.fool.com/cm001-to-summarize-what-others-have-s...

#71641 Jun 12: Timber REITs
http://boards.fool.com/timber-reits-30088909.aspx

#51204 Jul 08:Tenant improvements (TI) and tenant allowances (TA)
http://boards.fool.com/Message.asp?mid=26802769

#36391 Nov 05: How much debt is too much?
http://boards.fool.com/Message.asp?mid=23352619

#29558 Sep04: Lists of historical cap rates by sector
http://boards.fool.com/Message.asp?mid=21265939

#24517:Jan04: A brief history of REITs
http://boards.fool.com/Message.asp?mid=20111807

#22221:Aug03: Wells Private REIT (article link)
http://boards.fool.com/Message.asp?mid=19460400

#21813:Aug03: NNN (Commercial Net Lease)
http://boards.fool.com/Message.asp?mid=19405767
http://boards.fool.com/Message.asp?mid=19179844 (21813 Jun03)

#21114:Jun03: Great discussion on payout ratios
http://boards.fool.com/Message.asp?mid=19247574&sort=who...

#20763:Jun03: Payout ratios vs. NAV growth
http://boards.fool.com/Message.asp?mid=19156395

#20559:May03: When good REITs go bad -- hold or sell?
http://boards.fool.com/Message.asp?mid=19115515

#18523:Feb03: REITs during retirement & asset allocation
http://boards.fool.com/Message.asp?mid=18609214&sort=who...

#18485:Feb03: An example of stock valuation (MHX)
http://boards.fool.com/Message.asp?mid=18609214&sort=who...

#18434:Feb03: NHP & AIV
http://boards.fool.com/Message.asp?mid=18600075

#18185:Feb03: Typical FFO to AFFO ratios by sector
http://boards.fool.com/Message.asp?mid=18552134

#17715:Jan03: Balance sheet strength
http://boards.fool.com/Message.asp?mid=18434758&sort=who...

#17039:Dec02: Apartment woes
http://boards.fool.com/Message.asp?mid=18334212

#16080:Oct02: OT: How to Post a Table
http://boards.fool.com/Message.asp?mid=18066146

#16061:Oct02: Manufactured Housing outlook
http://boards.fool.com/Message.asp?mid=18058912&sort=who...

#15962:Oct02: Office Classes A,B,C Defined
http://boards.fool.com/Message.asp?mid=18028620

#15944:Oct02: 3-yr est. AFFO growth Vs. actual div growth
http://boards.fool.com/Message.asp?mid=18018048

#15802:Oct02: Leverage & REITs
http://boards.fool.com/Message.asp?mid=17982796

#15508:Sep02: YTD Best & Worst (long thread)
http://boards.fool.com/Message.asp?mid=17917635&sort=who...

#14388:Jul02: REITs & Asset Allocation
http://boards.fool.com/Message.asp?mid=17545713

#14254:Jul02: Dividend Growth Rates
http://boards.fool.com/Message.asp?mid=17503299&sort=who...

#13862:May02: Demand & Supply Factors, By Sector
http://boards.fool.com/Message.asp?mid=17361626

#13469:May02: CPG
http://boards.fool.com/Message.asp?mid=17171318

#13239:Apro2:NAV Estimates
http://boards.fool.com/Message.asp?mid=17095034&sort=who...

#11601:Jan02: NAV?
http://boards.fool.com/Message.asp?mid=16599495&sort=who...

#11462:Jan02: REITNUT Fund Holdings
http://boards.fool.com/Message.asp?mid=16561889

#11446:Jan02: Archstone
http://boards.fool.com/Message.asp?mid=16559233

#11422:Jan02: Geographic focus
http://boards.fool.com/Message.asp?mid=16556328

#11123:Jan02: Dividends & Inflation
http://boards.fool.com/Message.asp?mid=16468485&sort=who...

#11271:Jan02: Credit Ratings (entire thread, but esp 1st 3)
http://boards.fool.com/Message.asp?mid=16509550&sort=who...

#10998:Jan02: Writing Covered Calls
http://boards.fool.com/Message.asp?mid=16428746

#10088:Nov01: VNO
http://boards.fool.com/Message.asp?mid=16132855

#10083:Nov01: Effects of Recession on REITs
http://boards.fool.com/Message.asp?mid=16132422

#10033:Nov01: Good Management
http://boards.fool.com/Message.asp?mid=16013609&sort=who...

#9875:Oct01: Externally managed REITs (HRP, HPT, SNH)
http://boards.fool.com/Message.asp?mid=16014856

#9691:Oct01: Reitnut - Spotlighted Stocks
http://boards.fool.com/Message.asp?mid=15964273

#9212:Sep01: Early history
http://boards.fool.com/Message.asp?mid=15715812

#9142:Sep01: Bond Proxy REITs
http://boards.fool.com/Message.asp?mid=15674636&sort=who...

#8726:Aug01: Sector comparison
http://boards.fool.com/Message.asp?mid=15557389

#8619:Aug01: CA Apt REITs
http://boards.fool.com/Message.asp?mid=15509727

#8464:Jul01: REIT buys
http://boards.fool.com/Message.asp?mid=15420714

#8275:Jul01: Stocks worth NAV premiums
http://boards.fool.com/Message.asp?mid=15324729

#8208:Jul01: Issuing Stock at NAV premium
http://boards.fool.com/Message.asp?mid=15288892

#7960:Jun01: 2001 NAREIT conference notes
http://boards.fool.com/Message.asp?mid=15151491

#7829:May01: VNO & NAV premiums
http://boards.fool.com/Message.asp?mid=15040414

#7752:May01: Year of the Yield
http://boards.fool.com/Message.asp?mid=14976135

#7617:Apr01: DRE
http://boards.fool.com/Message.asp?mid=14876320

#7614:Apr01: AVB
http://boards.fool.com/Message.asp?mid=14875867

#7547:Apr01: Value in Large Caps
http://boards.fool.com/Message.asp?mid=14836948

#7463:Apr01: Offensive REITs
http://boards.fool.com/Message.asp?mid=14772347

#7436:Apr01: Defensive REITs
http://boards.fool.com/Message.asp?mid=14763049

#7246:Mar01: BED
http://boards.fool.com/Message.asp?mid=14624197

#7140:Mar01: PLD
http://boards.fool.com/Message.asp?mid=14533048

#6969:Feb01: VNO
http://boards.fool.com/Message.asp?mid=14369195

#5941:Dec00: DRE
http://boards.fool.com/Message.asp?mid=13874907

#5769:Dec00: WRI
http://boards.fool.com/Message.asp?mid=13827318

#5679:Nov00: 10 favorable events in 2000
http://boards.fool.com/Message.asp?mid=13767174

#5546:Nov00: UDR
http://boards.fool.com/Message.asp?mid=13660412

#5445:Oct00: HME
http://boards.fool.com/Message.asp?mid=13568235

#5316:Oct00: NNN REITs
http://boards.fool.com/Message.asp?mid=13421207

#5282:Oct00: 3 years AFFOs
http://boards.fool.com/Message.asp?mid=13401275

#5140:Sep00: Joint Ventures
http://boards.fool.com/Message.asp?mid=13315440

#4932:Aug00: SPG
http://boards.fool.com/Message.asp?mid=13157935

#4931:Aug00: Liquidation
http://boards.fool.com/Message.asp?mid=13157850

#4628:Jul00: CUZ
http://boards.fool.com/Message.asp?mid=12921447

#4476:Jul00: Management Rating Criteria
http://boards.fool.com/Message.asp?mid=12834934

#4402:Jun00: Best Managed
http://boards.fool.com/Message.asp?mid=12804161

#4327:Jun00: CNT
http://boards.fool.com/Message.asp?mid=12744666

#4185:May00: HME
http://boards.fool.com/Message.asp?mid=12656003

#4044:May00: The REIT Zoo
http://boards.fool.com/Message.asp?mid=12574589

#4015:May00: REIT for Mother
http://boards.fool.com/Message.asp?mid=12559203

#3825:Apr00: Industrials
http://boards.fool.com/Message.asp?mid=12469300&sort=who...

#3596:Apr00: PLD
http://boards.fool.com/Message.asp?mid=12368721

#3313:Mar00: Recent REIT history
http://boards.fool.com/Message.asp?mid=12203282

#3046:Feb00: Leverage
http://boards.fool.com/Message.asp?mid=12021745

#2818:Feb00: Meditrust
http://boards.fool.com/Message.asp?mid=11934160

#1689:Dec99: Good companies
http://boards.fool.com/Message.asp?mid=11617935

#1578:Nov99: Recent History
http://boards.fool.com/Message.asp?mid=11581494

#1378:Nov99: REIT Management - Good & Bad (numerous gems)
http://boards.fool.com/Message.asp?mid=11505163&sort=who...

#1173:Nov99: Misc
http://boards.fool.com/Message.asp?mid=11452890

#1065:Oct99: Depreciation
http://boards.fool.com/Message.asp?mid=11424490

#0954:Oct99: Healthcare
http://boards.fool.com/Message.asp?mid=11366592&sort=who...
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